23 Jul 2020 17:55 IST

Lessons from Netflix Culture for our Covid times

Freedom to employees and high-calibre team spirit can improve working environment tremendously

As work from home becomes the reality for companies across the world —the benefits and the burdens become apparent. Employees have had their peeves and pleasures. For many, just saving on the commute has been well worth the longer work hours they put in. While some others miss the chatter and networking that was part of their previous office life. Several companies have reported increased productivity, while others are severely paranoid, wondering whether their employees are treating this as a paid vacation. Some have even invested in software and tracking tools to be able to measure work and find out if their employees are logged in or not. Others have created a system based on trust and honour — a system that seems to work. The way in which an organisation heads is dictated mainly by its culture and driven by its leadership.

One company that has invited both admiration and scorn for its work culture is Netflix. The document ‘Netflix Culture’ that was first published in 2009, and updated many times since, challenges conventional thinking on how we can lead and foster the right behaviour in our organisations. Patty McCord, Chief Talent Officer, explains the thinking behind the document in the 2014 issue of Harvard Business Review.

Here are some takeaways from the culture that motivated performance at Netflix:

Freedom trumps process

The document explains how organisations typically grow. They start with an informal, freedom-driven culture when they are small. Then, as they grow, processes and policies hijack that freedom. The unplanned consequence is that high-performance people who thrive on a culture of freedom and personal ownership start to leave, and the organisation moves towards a gradual but withering slide into mediocrity. As the document puts it: “Most companies curtail freedom as they grow. Our model is to increase employee freedom as we grow, rather than limit it.”

Their logic is simple. Freedom attracts a special calibre of people — “responsible people thrive on freedom and are worthy of freedom.” Contrast that with bosses who demand to know where their employees spend every minute of their working hours. As I often tell my team: “If I have to police you, I’d rather fire you.”

If there is too much policing, too many time-tracking tools and work logs, it’s usually a sign that mediocrity has set in and the wrong profile of people are forming the majority. Leaders must see their role as on-boarding the right kind of talent who need no micro-management, relentless chasing, and constant follow-ups. The document points to how the disease first emerges and spreads.

Leaders find that as the organisation grows, the attention to the quality of talent is sometimes given the short shrift. Then, as complexity increases, chaos begins as things start to go wrong. A client engagement is badly handled, a compliance issue spirals out of control, product quality dips, and so on. To fight this, process becomes the weapon of choice — a hard and blunt instrument. The inevitable result, as the document prophesies: “Process-focus drives more talent out.”

There may be short term-efficiency gains as the organisation benefits from the standardisation and centralisation. But inevitably growth will bring challenges — challenges that need creativity, innovation, and out-of-box thinking — but sadly the people with those qualities have all already left. This is the scenario that leaders must foresee and prevent. Process can be convenient and clean. Freedom can seem messy and harder to manage. The trick is for leaders to stop managing and start leading. That’s what attracts and keeps the stars in the company.

Performance is the perk

In an era where each start-up competes with the other to have the cooler place to work — pizzas, parties, foosball, bring your dog to work, fitness trainers on call — all of that workplace buzz seems strangely impotent in these Covid times as employees are stuck at home. The different types of motivations that were possible in the physical workplace have just been switched off.

Netflix makes their approach clear in the document: “A great workplace is not espresso, lush benefits, sushi lunches, grand parties or nice offices. A great workplace is stunning colleagues.” The culture they create is — what satisfies an employee most is working with high-performance team members. This means leaders have the twin task of always looking for great talent and letting mediocre talent go.

This second part is often difficult. Small organisations grow strong bonds. Since most companies talk about ‘we are a family’ as a motto, it becomes quite tricky to let go off employees who perform poorly, because how do you let a ‘family member’ go? Netflix has the answer, “we’re a team, not a family.”

This belief in hiring stars, not plodders, is rooted in the evidence that in most procedural work stars are twice as effective as the average plodders and in creative/inventive work they are ten times as effective — so Netflix believed it was just not worth it to pull down the organisation with the weight of the Bs and the Cs. Naturally, the bell-curve is something they have shunned as an organisation. Same goes with the annual performance review, too. Performance conversations are an integral part of every leader’s active engagement with his team members. It is meant to happen all the time.

In a virtual workplace, this kind of culture continues to get great results. It thrives on high-performance, that continues to emerge at the intersections of high calibre people working together.

Your call

This system puts the onus on the employee to do what’s right. Netflix, was able to do away with their vacation policy. Their expense, entertainment, gifts and travel policy boasts of being just five words long: “Act in Netflix’s best interest.” With that kind of a touchstone, employees have a compass by which they can make decisions. Large organisations often spawn an elaborate bureaucracy, often with the purpose of tracking, policing and double-checking employees’ compliance with an ever-ballooning plethora of policies. Precious time and energy are lost.

Instead in a culture where high-performance employees are empowered to take their own call in a responsible way — both benefit — the organisation and the team. Leaders are forced to look beyond ‘controlling’ their employees to genuinely leading them. Netflix calls their model “highly aligned, loosely coupled.” Leadership focuses on creating the high alignment and the culture creates the loose coupling. Together that becomes fertile ground for outstanding performance.

Creating this kind of a culture is not easy. It calls for a special type of secure and unselfish leadership. When a culture expressly tells you “not to seek to please your boss. Instead, seek to serve the business.” Leaders have to raise the bar. The culture can’t emanate from the document. It has to be lived in the behaviours and conversations of leaders.

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